About Private Health Insurance in Australia

In Australia, private health insurance provides additional benefits beyond those paid for by the public health-care system. Medicare is the Australian government's universal health care program, providing medical services to most residents. Some people choose to also purchase additional coverage from one of the many private health insurance providers. Private health plans can provide for what Medicare doesn't cover and provides patients with additional treatment options in private hospitals.

Medicare

• To understand private health insurance, you must first understand Medicare. Medicare Australia is funded by tax revenues and provides partial payment for doctor's appointments, most prescription medicines, health programs for people on low incomes, incentive programs for doctors and family assistance to people raising children in Australia. Medicare also runs other programs related to health and well-being in Australia. It provides benefits for tests and examinations such as X-rays and pathology tests, consultation fees, eye exams, most surgical and therapeutic procedures, as well as some surgical dental procedures and other procedures, and people can choose their own doctors. Patients can also receive free treatment as public patients in public hospitals. If a person receives treatment as a public patient in a public hospital, the doctors and specialists involved will be nominated by the hospital, and Medicare will pay for the person's care and treatment or after-care.

Function

• Private health insurance is intended to cover the things that Medicare doesn't cover and give people more options and control over their treatment in the hospital. Medicare does not cover private patient hospital costs, dental care, ambulance services, home nursing, physiotherapy, occupational therapy, speech therapy, eye therapy, chiropractic services, podiatry, psychology, glasses and contact lenses, hearing aids, prostheses, cosmetic surgery or eye therapy. A private health insurance product with extra coverage will usually pay for most of these items.

Types

• Private health insurance plans are usually very similar. An individual or family can choose from very basic plans to protect them in case of unexpected hospitalization to comprehensive plans, which include not only private hospital coverage but also extras plans that will pay for dental care, optical care, chiropractic, physiotherapy and ambulatory service, among others. There are plans specifically designed for young couples who do not need reproductive health services or care that is usually only required for elderly patients.

Benefits

• Australia offers financial incentives for taking out private health insurance such as a 30 percent rebate. Persons with private coverage are eligible to claim 30 percent off the cost of care. Additionally, private health insurance patients have more control over their care in the hospital because they can choose to be treated in either a public or private hospital, as well as having the choice of doctors and specialists. Extras coverage is important to have in Australia because out-of-pocket expenses for dental care and ambulance services can be expensive.

Considerations

• People are penalized if they are what the government considers to be high-income earners and they don't take out private health coverage. If your income is over a certain threshold and you do not take out private insurance, you will have to pay the Medicare levy surcharge (MLS). This is an additional 1 percent of the taxable income paid by people who earn more than $73,000 per year (Australian) for singles and $146,000 (Australia) for couples and families. The MLS is in addition to the Medicare levy, which is 1 1/2 percent for everyone.

  People also are encouraged to take out hospital coverage at an early age. If a person takes out private health insurance after July 1 following his 31st birthday, he will pay more for the same level of coverage over his lifetime than a person who took out coverage before July 1 following her 31st birthday. This cost increases by 2 percent each year that a person delays taking out coverage.